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Corey Guen

Though Goff and Singh’s paper “Does trade reduce poverty? A view from Africa” obviously draws on evidence from African countries, I was struck by the applicability of the theoretical framework to China and its explosive growth in the past half century. In the conclusion, the authors wrote, “More openness results in a reduction in poverty when the financial sector is deeper, education levels higher, or governance stronger.” Africa is a continent with great variability in institutional quality and human capital investment, leading to an understandably wide range in reactions to increased trade openness. Furthermore, many African countries are rich in natural resources, which has served generally to their detriment in economic development. Beginning with colonialism and continuing to today’s globalized economy, African countries are routinely interacted with by the rest of the world in an exploitative manner; that is, the value to other countries in Africa is rarely productive capability, but rather what can be extracted with as little resistance as possible. As such, few African countries are well-equipped to reap the full benefits of globalization. China on the other hand, seems perfectly structured to do so.
Before its economic boom, China was still a well-educated, stably governed state. Its value lay not it natural resources, but in its sheer manpower and productive potential, which meant free trade was not exploitative, but rather complementary. As such, when globalization began to take hold, China was ready to receive and compound the benefits, especially to its legions of poor agricultural workers and city dwellers. The authors wrote that comparative advantage is only poverty reducing when the unskilled can freely leave contracting sectors and move into expanding ones; this is exactly what happened with manufacturing, as hundreds of millions of rural Chinese made temporary or permanent moves to urban areas to work in manufacturing, a near perfect example of the Lewis Model at work. Compounding the advantages of that rural labor surplus was a reasonably well-educated population able to take advantage of economic growth, and a government fully committed to promoting growth. Though the Chinese government is well-known for being controlling, its willingness to embrace free trade and to use the growth and profits to invest in domestic productivity have allowed it to achieve unprecedented and sustained growth for many years, and with it drastic reductions in poverty. The paper provided evidence that well-developed financial sectors also promote poverty reduction, and Beijing’s active promotion of financial services as well as the construction of “Economic Development Zones” in expanding cities seem to corroborate this claim. It may be argued that the government’s planned nature may run counter to the claim made by the authors that highly regulated economies cannot translate the benefits of free trade to reductions in poverty, but the Chinese government is a functioning bureaucracy that allowed just enough economic freedom to uplift its poor. The hukou system impedes this progress to some degree by restricting the flow of labor resources, but the poor Chinese, in conjunction with governmental action have managed to harness the poverty reducing power of trade openness with a strong, mobile labor force, substantial human capital investment and functional bureaucracy.

Cara Hayes

This paper examines the link between trade openness in poverty, arguing that trade liberalization increases economic opportunities, which, in turn, can worsen income inequality while reducing poverty. I have always thought that trade was one of the most effective tools for development so I was surprised to learn how ambiguous its effect actually is and that, many times, “the benefits of freer trade seem to bypass the poor.” Trade often increases demand for semi-skilled laborers and the poor are most likely unskilled. The most important finding of this paper is the necessity of policies to accompany trade, such as educational programs or financing opportunities, in order to allow the benefits of trade to reach the poor.

I think this article is especially interesting today because of Donald Trump’s commitment to renegotiating the NAFTA. From class today, I gained a deeper understanding of the anger felt by voters in industrial states who saw their local economies decimated when companies moved their operations abroad. It makes sense that Trump’s threats to raise tariffs on Mexican assembled goods to 35 percent appealed to them. They became the marginalized group while Mexican laborers and American producers reaped the benefits. While these American industrial workers serve to benefit if production is shifted back to the U.S., the affect on the poor of Mexico is likely to be devastating. Although it is ambiguous whether trade helps the poor, a lack of trade and resulting reduction of jobs and economic growth surely will hurt them. From an economic perspective, it is obvious that American’s who faced job displacement by transfer of industry abroad are still better off than the impoverished people of Mexico. An economy’s ability to take advantage of the opportunities offered by freer trade is characterized by finance, education and governance. Overall, the U.S. has a more educated population than Mexico. The American industrial workers are semi-skilled so have many more employment opportunities than the low-skilled poor people of Mexico, who will face even less demand if trade is restricted. Additionally, the U.S. has a more developed financial sector than Mexico.

While these are important considerations, there is an ethical dilemma over whether American policy makers should promote the interests of Americans or those in the world who are more needy. This predicament is a central issue of all trade agreements.

Allie Barry

By finding that trade openness has greater effects on the reduction of poverty when “the financial sector is deeper, education levels higher, and governance stronger”, this underscores the need for underlying policy to improve these areas so that countries are able to experience even greater benefits from open trade. For example, the paper finds that when the share of the population over age 15 completing primary education is greater than 55%, trade openness starts being favorable to the poor. While this paper had interesting findings, the policy implication seems to be the most pressing matter. In thinking of this paper in relation to the recent presidential election of Trump and his proposed trade policy, it caused me to think about his plans in a different way and try to reverse the argument in this paper to understand it in the context of less trade liberalization rather than more. Would policies that aim to improve these areas still have an effect on the reduction of poverty within a more closed economy? How great would these effects be compared to the findings of this paper with more liberalized trade? Instead of focusing on the actual trade regulations which he has stressed so much throughout his campaign, I will be curious to see what other policies he will choose to implement which effect the financial sector, education levels, and the strength of governance overall. These policies were not as clearly outlined in his campaign, yet he did very well in capturing the vote of the uneducated and the working class Americans who could benefit from the kind of policies that this paper suggests for more liberal trade environments. This paper caused me to think of the future of the U.S. with Trump in power in a different way than I had previously.

David Cohen

This paper confirms the literature generated by proponents of big-push theory, as well as those scholars who recognize the centrality of institutions in tempering growth and development. Le Goff and Singh underscore the importance of education, strong financial markets, and efficient bureaucratic institutions conducive, towards creating an environment conducive to economic growth and development. We’ve been talking about these key components over the course of the entire semester. By showing the inefficacy of trade liberalization towards poverty reduction (while education, financial markets, and institutions are inadequate), this displays the necessity to rectify these issues first. A big push of some sort to focus, for example, on an effort to better the national education system, seems essential towards the prospect of ever reaping benefits from free trade. Therefore, an effort to raise the standard of living among a developing country’s lower classes seems paramount when prioritizing growth policies, and a clear first step in establishing a virtuous circle. I’ve referenced China before, but I will do so again at risk of sounding unoriginal. Maybe I’ve just been exposed to Chinese history/policy more this semester. However, it is more likely that China simply has been the greatest growth success-story of our time. A country with hundreds of millions of impoverished peasants a couple decades ago has seen unbelievable development by operating under a closed economy, focusing on building Chinese industry, devaluing their currency, and promoting exports. They enacted policies that focused on building domestic institutions, rather than opening up their economy to liberalized world trade. It is currently a crisis in the PRC that growth has slowed to 6-7%. In the US, we would be happy with 2% growth.

Michael Hegar

In microeconomics, we were taught that when there is trading, as a whole everyone ends up better off. The simple two country/two goods model was a starting point but we live in a world that is much more complicated and countries produce multiple goods. The article "Does Trade Reduce Poverty? A View from Africa" shows that trade may make countries better off. However, a developing country may not have its poverty levels reduced because of trade. Theoretically there should be more jobs being created in new sectors but unskilled labor cannot easily transition into a skilled or semi-skilled labor market.

The static approach to free-trade argues that if there is trade, the abundant resource should increase. In the case of developing countries their abundant resource is unskilled labor and according to the static free trade theory: the poor should be better off because they have more jobs available. Yet the theory meets a road block when it is applied to the real world in that there are barriers to entry in markets and jobs do not always flow to unskilled labor markets in developing countries.

A dynamic approach in theory also would work to alleviate poverty in developing nations through a economic growth derived from free trade which leads to sustained growth. Free trade in theory would encourage investment and entrepreneurship. Again the theory does provide insight but the real world is still full of more challenges.

From this paper, I think trade is another thing where it depends. Policy has shown to be effective and the type of leadership in place also plays a role in whether or not and to what extent trade can reduce poverty levels. Having developing countries become more open to the idea of globalization and free trade can help their countries become more advanced. It is what they do with the gains from trade that will determine how the poverty level will be effected. Incentivizing the investment of gains from trade in health and education could be one way policy could help ensure that trade positively impacts reducing a countries poverty levels.

Julia Mayol

As we were discussing yesterday in class, the paper briefly explains how economic models and specifically the statistic approach (the Stolper-Samuelson theorem) suggests how trade openness should result in an increase in countries’ real income. However, we know that models just give us an insight of what happens in real life, but due to the amount of assumptions, what models predict does not always happen in real life. In this case, the model assumes labor mobility is not as easy as the model predicts.

Once again, I think this paper enforces the importance of every institution and how they are all related. “Trade openness tends to reduce poverty in countries where financial sectors are deep, education levels high and institutions strong,” in other words, they reduce poverty in developed countries. I think this paper shows evidence that there are things that need to be done before trade openness in order to achieve economic development. Moreover, even though the paper does not go into detail on this, it shows the importance of education levels, well developed financial markets, and efficient governance.

As we saw before, polices “do not travel well” from country to country, and the same happens with trade openness. Its effect on poverty depends on many different characteristics of the countries. The fact that trade openness might have reduced poverty in more developed countries does not mean that it will do so in any other country. And here is where different institutions play a role. The fact that more developed countries have more developed financial systems, means that the poor people from those countries have easier access to cheaper credit, which allows them to benefit more from trade openness. In relation to education, it allows people to take advantage of the new opportunities offered by trade. Finally, what is most relevant to me, is the quality of bureaucracy, meaning that high quality bureaucracy is more favorable for the emergence of new firms and the closing of older ones.

Additionally, even though the paper does not talk about this, I should mention that in order to help developing countries develop through trade openness it is not only important the country's decision, but also the policies that different countries adopt in relation to trading with the developing country. I think it is really interesting how, as mentioned in class, the best way to help developing countries is not through aid but by eliminating tariffs and quotas.

Ololade Rachel Oguntola

Trade is very much talked about with regards to it being beneficial to developed countries s well as developing countries. Reading Le Goff and Singh’s “Does Trade reduce Poverty? A view from Africa” really gave me statistical evidence and results that for developing economies, trade may be beneficial in some aspects but it does not necessarily reduce poverty levels. As mentioned in the article, “more openness results in a reduction in poverty when financial sector is deeper, education levels higher, or governance stronger.” This is particularly important to take note of. It is not disputed that trade aids in production efficiency with comparative advantage and specialization, but with regards to poverty, there is more to the story than just comparative advantage. In Appendix 6, looking at the three thresholds, i.e., financial development, education level and quality of institutions, countries are either above or under the threshold. What is unsurprising to me is how many of the countries studied are below the threshold with regards to quality of institutions. Looking at Nigeria in particular, I am once again reminded of the issue of corruption that is rampant in the country (and many other developing countries) and has played a huge role in suppressing the benefits of trade. Despite Nigeria being above the threshold on financial development, its poverty levels are not significantly reduced. This goes to show that financial development is not enough and higher education levels and more quality institutions are needed. It is therefore imperative that policies aimed at putting these countries above the three thresholds are created in an effort to actually tackle poverty and significantly reduce it. Countries like South Africa who are above the threshold on all three show lower poverty rates than countries like Nigeria that is above just one. This goes to show that the story does hold weight. It will be interesting however to see a comprehensive research that shows if there are countries that are above all three but have higher poverty levels than counties just above one or two. This goes to say that despite the benefits of trade openness, policies created cannot be a one-size-fit-all model because countries differ from each other and in creating such policies to ensure that trade does help reduce poverty, such differences should be duly noted and comprehensively understood.

Matthew Jones

My basic understanding of trade through my background in Micro and Macroeconomics led me to believe that trade was most certainly beneficial for poverty reduction to the presence of comparative advantages. However, the paper by Singh and Le Goff clearly highlights that trade can only be beneficial if certain factors accompany the openness of trade. Here complimentary policies are needed to facilitate the benefits of trade, but often times these policies are neglected. Here is where the most interesting part of development economics arises for me: decisions regarding the particular usage of policy. Countries will surely witness different results with similar policies, so the difficulty becomes deciding which policies will actually work. The multitude of ways in which a country can stimulate development through the coordination of policy with trade liberalization ultimately circles back to the particular need to treat development on a country by country basis. In such a case, trade liberalization may not even be the best policy prescription if the results of such a policy are contingent upon other factors.

Thinking more about trade liberalization in the context of the recent election, it will be interesting to see if closing our borders to trade has any effect on bringing back jobs as Trump desires. Will the increase in potential jobs coming back to the US outweigh the loss from being able to buy goods at a lower price due to comparative advantage? Or will closed borders have more negative effects than good?


I enjoyed this paper. Like some of those who have already posted, I always assumed, especially after seeing the simple trade model in intro microeconomics, that free trade is unequivocally beneficial for a country. Today’s class and this paper provided important insights into how there are a lot of issues that need to be considered when deciding on trade policy.
Although I found the explanations of the econometric procedures used to be dense, and was not able to get much meaning out of the way they accounted for certain variables, overall the conclusions reached were all interesting and logical. For instance, it makes perfect sense that without a certain threshold of cheap credit availability being met, trade liberalization will not help the poor, as much of our discussion this semester has shown the important benefits of credit access for those in developing countries. Other points brought up during our course this semester came into play in this article. Each factor mentioned that could undermine the positive effects of liberalization reminded me of the O-Ring theory—for example, the way ineffective competition policy was shown to prevent benefits to the poor. When the paper noted that there may be barriers to mobility for the poor, I thought of how switching professions would be a very risky undertaking for someone in a developing country, and the fact that the stakes are so high could be one of these barriers.
Looking into countries which have experienced great success from trade liberalization, it seems that a common theme is these nations liberalized their trade slowly, protecting industries during the transitional period to ensure they would be able to compete in the global marketplace. These countries’ experiences are congruent with the findings in this paper that proper adaptation of markets is necessary for the poor to benefit from liberalization.
My final thought on the paper is that even if trade liberalization has ambiguous on effects on poverty, there may be benefits from liberalization that aren’t directly economic, such as the introduction of progressive ideas and ideologies that would be worth considering as a facet of trade policy.

Elizabeth Wolf

One of the main salient points that Le Goff makes is that trade openness is not a magic bullet for poverty reduction; it isn’t “automatic”. In fact, trade can widen income inequality, with many of the benefits of trade missing the poor. To curb this effect, programs must be targeted to actually reach the poor, and alleviate structural unemployment and mismatched skills. This must be done on a national or regional level in order to provide aid where and through what means the population needs it most. What I found startling about this paper is Le Goff’s conclusion that without development in financial services, education, or an improvement in governance, trade will make poverty worse. Indeed, trade reform must be conducted alongside one or more of these other programs to not only increase a positive outcome, but to prevent harming the poor further. From a popular consensus perspective, free trade is viewed as the keystone effect in aiding development countries. However, further examination exposes a much more complex picture.

Another aspect of the paper that I thought was interested was Le Goff’s insight that “too much heterogeneity in the effects of trade reform on the poor.” I would argue that the heterogeneity of the world’s poor leads to varying degrees of success from trade reform polices. As a result, increasing welfare must be approached from multiple angles. Development must be a dynamic process that aids in the country’s progression towards a developed nation. Someone wins and someone loses in trade. However, measures can be taken to alleviate this divide. What measures, in what proportion, and at what time in the process? Well, we are left with the catchphrase of this course, it depends.

Jillian Leigh

The overarching theme in “Does trade reduce poverty? A view from Africa,” by Maëlan Le Goff and Raju Jan Singh, is that trade liberalization alone does not reduce poverty. Le Goff and Jan Singh introduced the paper by stating that traditional trade theory “predicts welfare gains from openness at the country level through specialization, investment in innovation, productivity improvement, or a better resource allocation,” (pg 1) but the most recent literature argues against this. The goal of this paper was to “explore the empirical link between trade openness and poverty,” (pg 20).

The results of their research supports the literature that trade liberalization alone does not reduce poverty. Le Goff and Jan Singh’s study also showed that in addition to either increasing education levels, deepening the financial sector and making institutions stronger, then trade liberalization can reduce poverty. This expansion on past literature is important because it supports both sides of the trade argument. It’s just clarifying the arguments by stating that trade may or may not improve poverty, it depends on what country you’re studying and the current state of this country.

This paper supports a theme that I have been noticing throughout the semester, there is not one successful way to reduce poverty or help developing countries, basically it depends. In order to promote development in developing countries it depends on what that country needs. Every developing country is different and shouldn’t be given the same “treatment” to development. This article shows this by proving that just by opening up trade in developing countries does not mean it’s going to reduce poverty. It might work in one country, in addition to other policies, but it doesn’t mean that it’s going to work with all developing countries.

Alex Shields

From my reading of the article, it seems like the argument of free trade having a positive impact on poverty is an oversimplification of the truth. Rather than freeing up trade being an important starting spot for poverty reduction, the findings of Le Goff and Singh seems to present free trade as a seconod step to poverty reduction, stating certain pieces must already be in place, such as a stronger financial sector, higher education levels, and stronger governance, for actual positive results to be seen. This article once again underscores the concept that has seemingly been stressed over the length of the term: there is no one solution to extreme poverty around the world; it takes a number of solutions. As always, I tend to think of these things in terms of football. I picture a football team as a developing country. When a team is really struggling, they look to bring in a hot shot rookie QB in the hopes that this player will turn the franchise around. All too often however, teams draft a rookie QB and push them into action without a good offensive line or a good running back to help them out. This almost always leads the young QB to fail early in his career and the team decides to move in a different direction after a few years of failure. This is what happens when a country looks to move to a system of free trade without a strong financial sector, higher education, or strong governance. The country will not see immediate improvements because all the necessary pieces are not in place. Instead, a team should look to fill in talent before drafting a rookie quarterback to increase the likelihood of the quarterback succeeding. In economic terms, a country should make sure to pursue a number of potential solutions to poverty instead of just one pursuing just one option. As we discussed in class, this paper seems to support the Big Push theory, calling for large scale investment across many different areas in order to improve the poverty levels in a developing nation in the same way good general managers look to improve their teams across the board before investing heavily at the quarterback position.

Matthew Sgro

In Le Goff and Singh's paper "Does Trade Reduce Poverty: A view from Africa? " we are once again given the ever illuminating answer (or lack thereof) of 'it depends'. As we've seen over and over again this semester a one track solution to the problem of poverty and underdevelopment in countries is not simple. In this case the degree to which trade actually helps countries DEPENDS on issues such as their financial sector development, education levels, and strength of institutions. Therefore, factors of development within countries build on each-other and have somewhat of a compounding effect.

While reading this paper it brought me back to other questions we've tried to answer this semester - "Does empowering women help development". Well only if other factors are in place so that these women can take full advantage of the greater freedoms, otherwise it may not produce many benefits. I also think back to the MicroFinance readings in which there was no clearcut answer for underdeveloped countries- and countries actually applied drastically different strategies. The ability to reap the rewards depended on many factors that differed depending on the country. Consequently, it seems as if we are giving underdeveloped countries mixed signals "Well this might work if this happens". The ambiguity is seemingly endless leaving developing countries essentially unassisted in figuring out what works for them.

Excerpt from the concluding remarks- "While trade liberalization is considered as an efficient tool to enhance development, both theoretically and empirically, its impact on poverty is ambiguous."
As illustrated above this paper only continues this trend of ambiguity by saying trade is good sometimes but it also has the ability to actually worsen the situation, "suggest that greater trade openness increases headcount poverty, widens the poverty gap, and reduces the income of the poorest quintile". So what are the developing countries to do ? How do they build a solid base so that they get the full benefits from factors such as opening trading and empowering women? I can only imagine how frustrating it is for these countries to hear the answer 'it depends'.

Andy Kleinlein

Does trade reduce poverty? A view from Africa,” by Maëlan Le Goff and Raju Jan Singh brings up an important thing that we have discussed throughout the semester. There is not a simply answer to solving poverty. It is a combination of factors. While having free trade could reduce poverty, it is not the solution. If a country only tried to use this technique to eliminate poverty, then it would fail. The paper mentions that education, financial sectors, and institutions must be strong in a country to make this successful. Throughout the semester, we have broken down each of these factors that make up development economics, and each time we have come to the same conclusion of if it will work. The answer is it depends. From my perspective, a holistic approach needs to be taken to address poverty, which can be extremely difficult. It is hard to pour the resources to solve each of these issues at once, but without one of them, progress is stymied.

Pearce Embrey

The article, "Does Trade Reduce Poverty? A View from Africa," really speaks to our class's motto of "it depends." In this rather empirical paper, researchers Le Goff and Singh spend a great deal of their time reviewing literature that attempts to determine whether trade reduces poverty, and the previous literature basically can't come to a consensus. Sometimes trade reduces poverty and sometimes it doesn't. After completing their own research and running a regression based on data in Africa, the researchers also conclude that their is more to the problem of whether trade reduces poverty. Rather, it is institutional policies that can really augment trade in reducing poverty in Africa. However, what policy to implement is a million-dollar question; every country has completely different economies and institutions. Even if one policy in a country in Africa pushes them out of a low-level equilibrium trap, that doesn't mean that it would work in a country like India. That is where researchers should focus their attentions: finding a sort-of blanket policy that can help developing countries, since the Washington Consensus attempted to solve this problem and didn't work.


Free trade is good. “Freer trade provides greater incentives for investment, the benefits of scale and competition, limitation on rent-seeking activities favored by trade restrictions and openness to new ideas and innovations,” the authors assert. But free trade might not be for everyone. “Trade entails a reallocation of resources away from less productive activities to more productive ones,” Haltiwanger, McMillan and Verduzco conclude. “There are too many barriers to entry and exit for firms, and too many barriers to labor mobility for workers,” the authors write. The surplus of labors, who are presumably living in poverty, must move from the contracting sector to the expanding one. But how can an impoverished worker take advantage of the increasing capital and technology in a new market when he hardly has such for his own contracting business? But among those countries who need widespread poverty reduction, few maintain such infrastructure. The transportation, communication, financial markets and monetary and fiscal policy required for such an environment are all too often incapable or missing altogether. I wonder, then, if the goal should first be infrastructure and then open trade. Without deep financial sectors, high education levels and strong institutions, according to the authors, developing countries cannot take advantage of freer trade as a means of poverty reduction.

Instead of looking to open borders immediately, perhaps we should look instead at the policy that ought to go along with trade improvements. Newfarmer and Sztajerowska assert that trade benefits are not automatic, but rather take time and take concurrent policy change in order to become effective. With policy aimed at macroeconomic stability and favorable investment circumstances, developing countries can more effectively use freer trade as a way to bring their people out of poverty.

Freer trade and boundary openness often occur simultaneously with other development goals, so it might be impossible to know if free trade is actually the aspect that relates directly to reduced poverty or if it is simply happening with another factor. The benefits of freer trade are, as the authors put it, ambiguous. This brings to mind the work of Esther Duflo in wondering if foreign aid really helps the poor of the world. We don’t know for sure, but we know something is happening and we can’t afford to stop making that thing happen.


I feel like this paper was a great embodiment of the phrase that professor Casey keeps saying in class, "It depends". Whenever we want to know if a certain variable has a positive effect the phrase always gets tossed out. Because in reality, nothing is as straightforward as we would like and most every situation is dependant on other factors. Like in this article they took the idea that trade openness was alway beneficial for reducing poverty and proved that in reality it depended on the depth of financial markets, the level of education, and strength of government institutions. In life we like to think that we can find a simple answer to most of our problems but in reality we need to take a deeper look as to why things work in situations and see what each situation depends on. Like in the article they mentioned "While on average trade does not seem to be associated with lower poverty, this observation hides important non-linearities and an interesting pattern of policy complementarities." When looking at trade liberalization from both sides there were a variety of things that were overlooked because the researchers just wanted an answer to whether or not trade reduced poverty and in turn the researches forgot to look at the situations in an individual level to see what factors determine the effectiveness or ineffectiveness of trade.


After reading this paper, it was interesting to see how various studies found that in some cases, trade enhances growth while other studies found that trade had a significant negative effect on economic growth. I found it interesting that in developing countries, opening up to trade actually increased the headcount of poverty and reduced the income of the bottom fifth of the poor population. I think this goes back to the paper we read earlier in the year in that there is no clear and absolute model, theory, or policy that efficiently increases economic growth. In the end, this paper concludes that that “greater trade openness is not significantly associated with either lower or higher levels of poverty” (Goff et al). The topic of trade is great relative to the current events in our world now. It seems that there is a trend a nationalism spreading worldwide. Trump is leading that in the United States, Great Britain has left the EU, Marine Le Pen is running for office in France and is proposing a “Frexit” referendum. It seems that many countries are looking inward. Trump stated that he wanted to end trade deals with China to help increase jobs in America and reduce poverty. But according to this paper, there really is only one answer to the question: Does trade liberalization reduce poverty? And the answer is: It depends.

Jack Miller

Matt Parker

Reading Le Goff and Singh's paper reminded me of a couple papers that I've read this year both in this class and in Global Politics. One paper in particular that came to mind was a piece by Peter Evans, in which he examines the political atmostphere and economies of various countries. One of the countries he looks at is Zaire and their former exploitative leader Joseph Mubutu Sese Seko. Mubutu controlled the vast supply of natural resources that Zaire held and sold them off to the highest bidder for personal profit. Political corruption runs rampant in third world countries. Inefficient and corrupt state institutions make strides in alleviating poverty near impossible. Money is allocated in inefficient ways to benefit a select few while most are left out. Le Goff's paper talks about the benefits that are available with the strengthening of financial institutions and subsequent expansion of available credit as well as human capital development, primarily in the form of education. Neither of these solutions are made possible without strong, honest state institutions. Alleviating corruption and establishing these strong state institutions is the only way that these countries can move to the next stage of strengthening financial institutions. After those three steps as Le Goff points out, then liberalization of trade can begin to have a positive effect.

Rachel Baer

Before reading this paper, given my basic understanding of micro and macro economics, I would have assumed that more liberalized trade would be an effective strategy in improving economic conditions and welfare for the poor in developing countries. However, after yesterday’s class and reading Le Groff and Singh’s paper “Does trade reduce poverty,” I realized that most of the assumptions that the models are based around do not apply to the real world.

Le Groff and Singh’s paper “Does trade reduce poverty?” discusses the ambiguity in the results of trade liberalization. They argue that freer trade is not an automatic fix for poverty reduction in poor developing countries, and explore the variation based on some country characteristics. The paper also argues that these policies can be more effective with the implementation of different complementary policies. When reviewing this paper, I am brought back to an idea that has applied to most of the topic that we have discussed this semester: it depends.

One part of the argument that I found particularly interesting was how complementary policies can be implemented in order to yield higher reduction in poverty. The paper explains how these policies should “encourage investment, allow effective conflict resolution, and promote human-capital accumulation” (Section 2).

I also found this paper to be relevant to recent policy because of the comments that Donald Trump has made to renegotiate/eliminate NAFTA. I found an interesting article on Business Insider that explains how “The key to NAFTA’s liberalizing effect on trade is that is eliminates a lot of taxes on imports and exports between the three partner countries, which makes trading cheaper” (http://www.businessinsider.com/trump-nafta-us-jobs-2016-11). After this week’s discussion and reading, I have a better understanding of the impacts that closing US tread could potentially have. While we have discussed how trade liberalization is not always the answer to poverty reduction, we have also discussed how important it can be to increase productivity and allow countries with a comparative advantage to specialized its trade.


Keeping with the theme of the class, it is impossible to pinpoint one particular policy as the solution to poverty. The main takeaway I took from this paper was the need for complimentary policies to trade liberalization such as stronger institutions and human capital investments. A country may not be ready for trade deals if they do not have a baseline level of education and institutions that will ensure they are able to hold their own against the stronger developed countries. A country may need to focus on strengthening their workforce before exposing them to large scale changes that will occur under large free trade agreements.I also think its important to remember that the goal of trade deals is not to reduce poverty, but they instead focus on lowering prices for domestic consumers or increasing the market size for domestic producers. Like a profit-seeking business, the U.S. does not enter a trade deal seeking to increase the livelihoods of citizens of another country. However, this could change with more studies like this and others that compare the costs and benefits of trade or aid.

I am working on a research paper in another class on the constriction of a canal through Nicaragua. While this is not the same thing as free trade agreement, it still shows who tends to gain from globalization. Nicaragua is working with a Chinese firm to construct a canal to compete with Panama. They claim it will drastically increase economic growth and lower poverty rates. However, many observers do not believe this is what will actually happen. The construction jobs will only be temporary, and the engineers of the project will not even be Nicaraguan, so much of the benefits may go to wealthier people in Nicaragua or foreigner. With the increased exposure to trade, they may be able to increase their service sectors that are related to the canal (similar to what has happened in Panama), but this will require increases in education levels, infrastructure and institutions.

Tony Du

Goff and Sigh’s findings clearly back up the claim that free trade is not as universally beneficial as classical economic theory paints it. There is little debate over whether or not trade is advantageous in the aggregate. However, whether or not free trade is beneficial for developing countries is an answer we must agree on, especially if we are urging these countries to embrace it. Theoretically, the poor and unskilled in developing countries have the most to gain from trade. One key point from the article is that “for comparative advantages to increase the incomes of the unskilled, they need to be able to move out of contracting sectors and into expanding ones” (6). This is once again an example of a model not perfectly aligning with the circumstances of reality. In the real world, labor is not so fluid and mobile. Furthermore, we have to ask whether or not those most in need are the ones benefitting from the trade-related gains. Oftentimes it is skilled-labor that has an increase in demand, not the unskilled labor of the poor which can possibly worsen poverty.

One common theme I’ve picked up through this year is that, despite what we may want to believe, there is no ultimate one-size-fits all solution to reducing poverty and increasing economic growth. Each of these growth strategies are simply pieces to a larger puzzle. Free trade is not the end all be all to development. It is in conjunction with human capital investments, strong institutions, and government policy that we can begin to tackle the disparity between the wealthiest and poorest countries.

Crosby Ellinger

"Does Trade Reduce Poverty" a research study conducted by Maëlan Le Goffa and Raju Jan Singhb, hits on one of the major themes of this course throughout the semester. This paper looks at the liberalization of trade, and its relation to poverty. One of the major results that the study found was that, "the effect of trade openness on poverty would depend on a variety of country characteristics". This has been a major theme of this course; that there is no cut and dry solution to solving poverty and inequality. Each country has its own unique characteristics, cultures, and systems, with unique problems of their own.

This study finds that, as with any other potential "solution" to reducing poverty, its effect depends primarily on the country it is being used in. That is, while trade openness could work to reduce poverty in Asia, it might not significantly affect poverty levels in Africa.

Furthermore, while the results of the study found that trade openness' impact on poverty is ambiguous, that does not mean that opening trade up in a specific developing country won't reduce the level of poverty.

In conclusion, it is important to remember that there is no individual solution to eliminating poverty, but rather, certain ways in which we can work to reduce inequality in countries, and reduce the level of poverty. It is also important to remember, that each country is unique, and what works in one country won't always work in another, as this study provided.

Ella Rose

I think a lot of what this articles is getting at is something that we discussed earlier in the semester. It is clear that trade leads to economic growth. That has been studied and doesn't seem to depend on much. But whether or not it leads to a reduction in poverty simply has to do with looking at where that wealth is going to be distributed. What increase in GDP leads to what decrease in poverty? This, as we have learned has everything to do with institutions and structures within a society. If it's financial systems, education, and government is set up to increase inequality and not help the poor, then increasing trade will also not help the poor. Having just (fair) institutions is necessary for helping poor people. We know this already from looking at how GDP growth effects inequality, so it seems only natural that this would carry over into. As we continue in this class it seems like this is a common theme. Many many things (probably to many to even name) have to come together in order to have a real effect and increase development as freedom. With anything by itself, you cannot guarantee the outcome. This paper points to one of the keys to economic growth and development. You have to be able to look at the entire picture to understand anything of what's going on. Just about everything is an "O" in the O-ring theory. Any missing piece seems to make the entire economy not develop as much as it could. This is why development is such as complicated issue, as seen by this article.

Lilly Grella

Obviously, this research paper does not find out much specifically in regards to the relationship between poverty and trade liberalization. The debate continues on how much impoverished individuals truly gain from trade openness. The paper reveals the two sides to the argument. On one hand, poor people share in the gains from international trade; while on the other hand, the benefits are not adequately received by those below the poverty line. The important conclusion they come away with is that it depends on the county’s political and financial environment as to whether the effect of openness of trade is positive or negative on poverty. This course as a whole has stressed to me one important fact that I think is oftentimes overlooked. Poverty alleviation and the methods to achieving it, from a personal to a national level, depends entirely on the situation. Each person or country’s experience of poverty is an extremely unique situation and ways of solving it depend upon these situations. There is no cure all; A panacea does not exist. Le Goff realizes this and acknowledges the fact that this is most likely the cause to why ambiguity exists between poverty and trade liberalization. While it is assumed that freer trade is an important piece in the country’s development, it is even more important to understand that not all countries will find it a useful component. Le Goff recognizes that the status of the country’s institutions, financial sector, and human capital affect the influence of openness of trade on poverty. This research paper really illuminated the concept we’ve been touching on all semester as it is extremely important to dig into the details rather than assume a stereotype of how the impoverished situation will react to different development strategies.

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